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2 Giuliani Associates Tied to Ukraine Scandal Arrested on Campaign Finance Charges 2 Giuliani Associates Tied to Ukraine Scandal Arrested on Campaign Finance Charges
(about 4 hours later)
WASHINGTON — Two associates of the president’s private lawyer Rudolph W. Giuliani, who helped fund efforts to investigate one of President Trump’s political rivals, were charged with violating campaign finance laws in a new criminal case that touched on their work in Ukraine and alleged financial ties to Russia. WASHINGTON — Federal prosecutors unsealed charges on Thursday against two men who have aided President Trump’s efforts to gather damaging information in Ukraine about his political opponents, a criminal case that signaled growing legal exposure for the president’s allies as Mr. Trump tries to blunt an impeachment inquiry in Congress.
The F.B.I. arrested the two men, Lev Parnas and Igor Fruman, who are also important witnesses in the House’s impeachment inquiry, as they were trying to board a Frankfurt-bound flight with one-way tickets on Wednesday night at Dulles International Airport in Virginia. The indictment of the two men, Lev Parnas and Igor Fruman, sketched a complex scheme to violate campaign finance laws and did not accuse Mr. Trump of wrongdoing. But it revealed new details about the push to pressure Ukraine: a campaign encouraged by Mr. Trump, led by his private lawyer Rudolph W. Giuliani and assisted by obscure figures like Mr. Parnas and Mr. Fruman.
The four-count indictment came as Mr. Trump continued to defend his pressure campaign, in which Mr. Giuliani figured prominently, to get Ukraine’s government to open investigations that could benefit him politically. Their effort is already the subject of an impeachment inquiry, and the new indictments suggest the first criminal implications of the shadow foreign policy being pushed by Mr. Giuliani on behalf of the president. Mr. Trump continues to defend the effort, which is the focus of the impeachment inquiry that House Democrats opened last month. The new indictment, however, suggests the first criminal implications of the shadow foreign policy that Mr. Giuliani pushed on behalf of the president.
“This investigation is about corrupt behavior — deliberate lawbreaking,” said William F. Sweeney Jr., the top agent in the F.B.I.’s New York office. And it is another example of the extent that the messy power dynamics of Ukraine — a former Soviet republic and close American ally with a recent history of political upheaval — now dominate discussions about Mr. Trump’s future. The impeachment inquiry began after a C.I.A. officer who has worked at the White House raised alarms about a July telephone call in which Mr. Trump seemed to suggest that American military aid was contingent on Ukraine’s help in unearthing information that could help Mr. Trump politically.
The indictment connected Mr. Parnas and Mr. Fruman to an effort to remove the United States ambassador to Ukraine, Marie L. Yovanovitch, from her post. Ms. Yovanovitch was recalled last spring after coming under criticism from many allies of Mr. Trump. House Democrats are looking into whether her removal was linked to Mr. Trump’s efforts to gain politically helpful information in Ukraine. Mr. Giuliani has been public about his hunt for damaging information about Democrats, and the indictment gives a more complete picture about how he seems to have subcontracted part of the work to Mr. Parnas and Mr. Fruman, two of his longtime associates.
According to the indictment released on Thursday, Mr. Parnas and Mr. Fruman, who previously drew the attention of the Federal Election Commission for donating $325,000 to a pro-Trump super PAC last year, donated money to and pledged to raise additional funds in 2018 for a member of Congress who, while not named in the indictment, is identified in campaign finance filings as Representative Pete Sessions, Republican of Texas. It directly connected the two men to a key element of the pressure campaign, an effort to recall the United States ambassador to Ukraine, Marie L. Yovanovitch, after she became a focus of criticism from many of Mr. Trump’s allies. Mr. Parnas and Mr. Fruman donated money and pledged to raise additional funds in 2018 — some violating legal limits — for a congressman who was then enlisted in the campaign to oust her, court papers showed.
Mr. Parnas then asked Mr. Sessions for his help in pressing the Trump administration to remove Ms. Yovanovitch. They were charged with making illegal campaign donations, and law enforcement officials harshly criticized the scheme.
The indictment said Mr. Parnas acted, “at least in part, at the request of one or more Ukrainian government officials.” The indictment named no Ukrainian officials, but Ms. Yovanovitch’s main critic in the Ukrainian government was Yuriy Lutsenko, then the nation’s prosecutor general. “Campaign finance laws exist for a reason,” William F. Sweeney Jr., the top agent in the F.B.I.’s New York office, said during a news conference on Thursday. “The American people expect and deserve an election process that hasn’t been corrupted by the influence of foreign interests, and the public has a right to know the true source of campaign contributions.
“They sought political influence not only to advance their own financial interests, but to advance the political interests of at least one foreign official — a Ukrainian government official who sought the dismissal of the U.S. ambassador to Ukraine,” Geoffrey S. Berman, the United States attorney for the Southern District of New York, said at a news conference announcing the charges. “Laws make up the fabric of who we are as a nation,” he added. “These allegations aren’t about some technicality, a civil violation or an error on a form. This investigation is about corrupt behavior and deliberate lawbreaking.”
“Protecting the integrity of our elections — and protecting our elections from unlawful foreign influence — are core functions of our campaign finance laws,” he said. The lawmaker is named in the indictment only as “Congressman-1,” but campaign finance filings identify him as former Representative Pete Sessions, Republican of Texas. Mr. Sessions, then the chairman of the powerful House Rules Committee, wrote a letter in 2018 to Secretary of State Mike Pompeo saying that Ms. Yovanovitch should be fired for privately expressing “disdain” for the current administration.
Mr. Parnas and Mr. Fruman illegally funneled money through a company they set up to mask themselves as its sources, then gave the money to the pro-Trump super PAC, America First Action, the indictment said. Mr. Sessions, who lost his re-election bid last year, said in a statement that he could not confirm that he was “Congressman-1” but that he would “vigorously defend myself against any allegations of wrongdoing” and that he had no knowledge of the scheme detailed by prosecutors.
Prosecutors said Mr. Parnas and Mr. Fruman, along with two other men indicted on Thursday, David Correia and Andrey Kukushkin, also funneled money with ties to Russia to state and federal candidates in exchange for potential influence, according to court papers. The men wanted to set up recreational marijuana businesses in Nevada and other states, and were seeking political help to get access to the necessary licenses. He said that he met the two men to discuss Ukraine’s bid for energy independence and that he wrote to Mr. Pompeo “separately, after several congressional colleagues reported to me that the current U.S. ambassador to Ukraine was disparaging President Trump to others as part of those official duties.”
A federal judge in Alexandria, Va., set bail on Thursday for Mr. Parnas and Mr. Fruman at $1 million each. Prosecutors argued that they were flight risks. Some Trump allies believed Ms. Yovanovitch was trying impede their effort to dig up damaging information about former Vice President Joseph R. Biden Jr. and his son Hunter Biden, a former Ukrainian official has said, and House Democrats are looking into whether her removal was linked to Mr. Trump’s attempts to gain politically helpful information.
Dressed in T-shirts, Mr. Fruman and Mr. Parnas were represented by two lawyers who defended Paul Manafort, Mr. Trump’s onetime campaign chairman who was convicted of financial fraud in the same courthouse last year. The lawyers, Kevin M. Downing and Thomas Zehnle, said they were only representing the men for the hearing; neither has hired a lawyer, they said. Mr. Parnas and Mr. Fruman are witnesses in their impeachment inquiry, and Mr. Parnas had been scheduled to be questioned Thursday by investigators.
Another hearing was scheduled for Thursday in New York, where the charges were filed. Both men face four felony charges. Three counts each carry a maximum penalty of five years each, while the fourth charge caries a maximum penalty of 20 years. Ms. Yovanovitch was herself scheduled to appear Friday on Capitol Hill, but she remains an employee of the State Department and the Trump administration could try to block her testimony. If that happens, House Democrats have said that they are prepared to subpoena her.
Mr. Correia was still at large but was expected to turn himself in, according to a law enforcement official. Mr. Parnas and Mr. Fruman were arrested on Wednesday evening at Dulles International Airport as they held one-way tickets on a Lufthansa Airlines flight to Frankfurt. They were walking down a glass-framed jetway when two plainclothes officers stopped them, according to someone who witnessed the arrest.
Mr. Kukushkin appeared briefly in federal court in San Francisco, where the government argued that he was a flight risk who should not be granted bail, citing his connections to overseas wealth, his multiple properties in the Bay Area and his refusal to turn over his Ukrainian passport. His lawyer, Alan Dressler, did not immediately respond to a request for comment. After they produced their passports to one of the officers, according to the witness, they were instructed to turn around and walk back toward the terminal, where a phalanx of uniformed and plainclothes officers waited.
Hours after the indictment was unsealed, House impeachment investigators doubled down on their own efforts to speak to Mr. Parnas and Mr. Fruman, issuing subpoenas compelling them to answer questions about their work with Mr. Giuliani in Ukraine. At a hearing on Thursday in federal court in Northern Virginia, prosecutors argued that the men were flight risks, and a judge set bail at $1 million each. Dressed in T-shirts, Mr. Fruman and Mr. Parnas were represented by two lawyers who defended Paul Manafort, the president’s former campaign chairman who was convicted last year in the same courthouse of financial crimes associated with his own work in Ukraine.
The subpoenas, which instruct them to appear on Wednesday, makes no mention of the federal indictment, which may complicate their ability or willingness to cooperate with the impeachment investigation. Facing criminal charges for work that appears to have at least some connection to the subject of the impeachment inquiry, they may choose to assert Fifth Amendment rights. A lawyer for the men, John M. Dowd, who was not at the hearing, declined to comment. His clients were ordered to appear in court on Thursday in New York, where the charges were filed.
Attorney General William P. Barr visited the United States attorney’s office in Manhattan on Thursday morning as part of a scheduled trip to see prosecutors in New York this week. He was briefed on the campaign finance case throughout the year and was notified of the charges and arrests ahead of time, a Justice Department official said. The work the two men did in Ukraine for Mr. Giuliani seems to have been a mixture of business and politics. Mr. Parnas advised Mr. Giuliani on energy deals in the region and pursued his own in Ukraine even as he portrayed himself as a representative of Mr. Giuliani on the Trump-related matters.
Mr. Parnas and Mr. Fruman aided Mr. Giuliani’s efforts to gin up investigations in Ukraine into former Vice President Joseph R. Biden Jr. and his son Hunter Biden, among other potentially politically beneficial investigations for Mr. Trump. The indictment said Mr. Parnas acted “at least in part, at the request of one or more Ukrainian government officials.” None were named, but Ms. Yovanovitch’s main critic in the Ukrainian government was Yuriy Lutsenko, then the nation’s prosecutor general who himself has a history of wielding the law as a weapon in his personal political battles.
Mr. Trump spoke by phone with President Volodymyr Zelensky of Ukraine on July 25 and pressed for help from Ukraine in looking into the Bidens and the origins of the special counsel’s investigation into Russian interference in the 2016 election. House Democrats and an anonymous whistle-blower have said this was an abuse of his office for personal gain. Both Mr. Fruman and Mr. Parnas appear to have at least glancing contacts with Mr. Trump. Mr. Trump invited Mr. Fruman to a fund-raiser at Mar-a-Lago last year, he said in an interview with Forum Daily, a publication that bills itself as the “Voice of Russian Speaking America. The article featured a photograph of the two men, with the president giving a thumbs-up sign.
The defendants named in the indictment on Thursday were charged with making illegal campaign contributions. Mr. Parnas posted a photo on Twitter this spring of himself with the president and wished Mr. Trump a happy birthday. “I am honored to call you Mr. President!!!,” he wrote. “And my friend!!”The president sought to distance himself from the men as he left the White House on Thursday en route to a political rally in Minnesota.
The indictment called one element of the case a “foreign national donor scheme” in which the defendants conspired to make political donations, funded by someone identified only as “Foreign National-1” who had “Russian roots.” “I don’t know those gentlemen,” Mr. Trump said. “Now it’s possible I have a picture with them because I have a picture with everybody. I don’t know about them. I don’t know what they do. I don’t know, maybe they were clients of Rudy. You’d have to ask Rudy.”
The goal, according to the indictment, was to funnel money “to politicians and candidates for federal and state offices to gain influence with candidates as to policies that would benefit a future business venture.” Mr. Giuliani said that no one from the Justice Department had contacted him about Mr. Parnas and Mr. Fruman. “I have to presume they’re innocent,” he said. “None of those facts that I see there make any sense to me, so I don’t know what they mean.”
The arrangement involved an attempt to seek licenses to sell legal marijuana in Nevada, but the defendants missed the deadline to apply for the licenses — “two months too late to the game unless we change the rules,” Mr. Kukushkin told the foreign national in late October 2018, according to the indictment. He said that he was aware they were leaving the country, but he dismissed the idea that they were fleeing and said they regularly travel to Europe on business.
Mr. Kukushkin noted that a state political candidate in Nevada, identified in the indictment as “Candidate-1," would be in a position to change the rules, if elected. Days later, Mr. Fruman donated $10,000 to the candidate’s campaign, which campaign finance records identify as Wesley Karl Duncan, a Republican running at the time for the Nevada attorney general seat, which he lost to a Democrat. Based in South Florida, Mr. Parnas and Mr. Fruman are executives of an energy company that donated $325,000 to a pro-Trump super PAC last year, which prompted a Federal Election Commission complaint by a nonpartisan campaign finance watchdog accusing the men and the company of violating campaign finance laws.
Mr. Duncan said he learned of the indictment on Thursday and immediately directed his campaign treasurer to return Mr. Fruman’s contribution. “I had no idea Mr. Fruman was acting unlawfully,” Mr. Duncan said in a statement. Not long before the large donation, the men created a limited liability company called Global Energy Products, which they used to funnel large contributions, according to the indictment.
Mr. Fruman also donated $10,000 on Nov. 1 to a second unnamed candidate, according to the indictment. Campaign records identified the candidate as Adam Laxalt, the former Nevada attorney general who was running for the governor’s seat and lost. Mr. Laxalt, who was at the White House on Tuesday for a Presidential Medal of Freedom ceremony, has been the subject of recent talk about running in a primary race against Representative Mark Amodei, one of a growing number of Republicans who support the House impeachment inquiry. Mr. Amodei has not said that Mr. Trump should be impeached, but that Congress should “follow the facts.”
Mr. Fruman “came to a Las Vegas fund-raiser. Adam doesn’t know the man,” said a spokesman for Mr. Laxalt, Andy Matthews. He did not immediately respond to questions about Mr. Fruman’s campaign contribution.
Mr. Parnas and Mr. Fruman also pledged to raise funds for Mr. Sessions of Texas, identified as “Congressman-1” in the indictment, according to a person familiar with the matter. The men asked Mr. Sessions, who then was the chairman of the powerful House Rules Committee, for his help in removing Ms. Yovanovitch, according to the indictment.
Impeachment investigators are also intensely interested in her removal. Mr. Sessions lost his re-election bid in 2018.
The indictment said Mr. Parnas and Mr. Kukushkin, who was arrested in San Francisco, are Ukrainian-born Americans, while Mr. Fruman was born in Belarus and became an American citizen. Mr. Correia is American-born.
Mr. Parnas and Mr. Kukushkin were expected to appear Thursday in court in Northern Virginia, according to a spokesman in the United States attorney’s office in Manhattan.
Mr. Parnas and Mr. Fruman have acted as emissaries in Ukraine for Mr. Giuliani as he has sought to uncover information about, and encourage investigations into, Mr. Trump’s rivals, including Mr. Biden.
Mr. Parnas, who has known Mr. Giuliani for years, worked with Mr. Fruman to connect Mr. Giuliani to Ukrainian prosecutors who provided information to Mr. Giuliani, as The New York Times revealed in May.
House Democrats are interested in whether Mr. Trump and Mr. Giuliani viewed the former ambassador to Ukraine as an impediment to attempts to pressure Ukraine to undertake the investigations they desired. Ms. Yovanovitch is scheduled to appear Friday on Capitol Hill, but she remains an employee of the State Department, which could try to stop her testimony. House Democrats are prepared to issue a subpoena if it does.
Mr. Parnas and Mr. Fruman are based in South Florida, and are executives of an energy company that donated $325,000 to a pro-Trump super PAC last year, prompting a Federal Election Commission complaint by a nonpartisan campaign finance watchdog accusing the men and the company of violating campaign finance laws. According to the indictment, not long before the large donation, Mr. Parnas and Mr. Fruman created a limited liability company called Global Energy Products, which they used to funnel large contributions.
Last month, Mr. Giuliani sought to minimize the significance of the campaign finance inquiry into the two men and said it was resolved. And on Thursday, he questioned the timing of the indictment. “All I can tell you about this arrest is, it comes at a very suspicious time,” he said.Last month, Mr. Giuliani sought to minimize the significance of the campaign finance inquiry into the two men and said it was resolved. And on Thursday, he questioned the timing of the indictment. “All I can tell you about this arrest is, it comes at a very suspicious time,” he said.
Mr. Parnas’s and Mr. Fruman’s lawyer, John M. Dowd, who previously represented Mr. Trump in the special counsel’s inquiry, did not immediately respond to a request for comment. Prosecutors said Mr. Parnas and Mr. Fruman, along with two other men indicted on Thursday, David Correia and Andrey Kukushkin, also funneled money to state and federal candidates in exchange for potential influence, according to court papers. The men wanted to set up recreational marijuana businesses in Nevada and other states, and were seeking political help to get access to the necessary licenses.
The Wall Street Journal first reported the charges. The plot was funded by someone identified only as “Foreign National-1” who had “Russian roots,” court papers showed.
Eileen Sullivan and Adam Goldman reported from Washington, and William K. Rashbaum from New York. Reporting was contributed by Nicholas Fandos, Katie Benner and Kenneth P. Vogel from Washington; Maggie Haberman from New York; Kate Conger from San Francisco and Zach Montague from Alexandria, Va. Susan Beachy contributed research. The arrangement involved an attempt to seek licenses to sell legal marijuana in Nevada, but the defendants missed a deadline to apply for them — “two months too late to the game unless we change the rules,” Mr. Kukushkin told the unidentified foreign citizen, according to the indictment.
Mr. Correia was still at large but was expected to turn himself in, according to a law enforcement official.
Mr. Kukushkin appeared briefly in federal court in San Francisco, where the government argued that he was a flight risk who should not be granted bail, citing his connections to overseas wealth, his multiple properties in the Bay Area and his refusal to turn over his Ukrainian passport. He was to appear again on Friday in court to discuss bail.
His lawyer, Alan Dressler, did not immediately respond to a request for comment.
Mark Mazzetti, Eileen Sullivan and Adam Goldman reported from Washington, and William K. Rashbaum from New York. Reporting was contributed by Nicholas Fandos, Katie Benner and Kenneth P. Vogel from Washington; Maggie Haberman from New York; Kate Conger from San Francisco and Zach Montague from Alexandria, Va. Susan Beachy contributed research.